X allowed D to live in a cottage for the remainder of her life free of rent but that the agreement could be determined with not less than 4 weeks notice. This was described in the contract as making D a tenant at will. X then sold to P, subject to D’s right, for which P paid a reduced price. P then tried to give D notice and claimed, after her continued occupation beyond the 4 weeks, that she was trespassing. CA denied P’s claim, holding that D was entitled to reside in the house until her death. It held that contractual descriptions were inconclusive and that P undertook a constructive trust to allow D’s residence there, due to the words “subject to”.
Lord Denning MR: A purchaser can take “subject to” the other party’s right either expressly (where the contract so provides) or impliedly. In either case a constructive trust can be imposed.
NB other judges worked on the basis that D was a tenant for life and therefore there was no need for a constructive trust.